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What is an Early Retirement Age?

Early Retirement Age Varies


Early Retirement Age

What is early retirement? 55, 60, 65?

Many Americans think of age 55 or earlier as an early retirement age. My definition of early retirement age is any age before age 65. Here's why.

Early Retirement at 55

Retiring at 55 or younger is most common for people who began military or civil service (such as firemen and policemen) at an early age, and can thus retire with a full pension and health benefits even though they are not yet 65. If you don't have these kind of benefits, retiring at 55 takes a lot more savings and planning. Read 3 Things to Consider Before You Retire at 55 to learn about the key items you'll need to think about.

Challenges Of An Early Retirement Age

The primary challenge in choosing an early retirement age is making sure you have enough assets to provide an acceptable level of income for your future. Someone who retires at 55 may need their savings to last 35 - 45 years in retirement. If you work to 70, your savings will need to provide for a shorter time frame. You can use various retirement income calculators to help you create a projection, or you can use the services of a qualified financial advisor.

Social Security Early Retirement Age

Social Security defines early retirement age as age 62. If you begin taking Social Security benefits at age 62 you will receive a reduced benefit.

Many people do not realize that even if you choose an early retirement age, you do not have to begin Social Security benefits early. You may be able to maximize your lifetime Social Security by delaying your benefits until full retirement age, or age 70 when you’ll get substantially more. To employ this strategy you would use your own assets for income in the meantime. Contrary to what most people believe, planning in this way can often get you substantially more lifetime income than taking benefits early. (Use a Social Security calculator to determine the best age to begin your benefits.)

401k Early Retirement Provisions

401k plans have a provision which allows you to access funds as early as age 55 without paying an early withdrawal penalty tax. This only works if you leave your employer after you have reached the age of 66. There are rules you must follow for this to work. Read 401k Retirement Age for details.

My Definition Of Early Retirement Age – Any Age Before 65

For planning purposes, I define early retirement age as any age prior to 65. I define it this way because at 65 you become eligible for Medicare benefits. If you retire prior to this age, you will need to make plans to secure adequate health insurance coverage. That is more easily accomplished now by accessing plans through the health exchange marketplace.

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